Collection costs are on the rise and managing these costs is among the issues keeping many healthcare leaders up at night.
While inefficient health system processes can certainly play a role in driving up the cost to collect, the primary trends fueling the increase of these costs are patients' rising financial responsibility for care and the emergence of more stringent payer requirements, such as increases in prior authorizations. Between 2016 and 2018, prior authorizations increased 27 percent, according to the Council for Affordable Quality Healthcare.
The rise of high-deductible health plans has also contributed to the rising cost to collect for providers. The number of individuals enrolled in high-deductible health plans increased from 25.3 percent in 2010 to 47 percent in the first 3 months of 2018, according to numbers compiled by the CDC. Most patients don't hit their annual deductible, meaning direct payments from patients now make up a larger share of hospital revenue than ever before. However, collecting direct payments from patients can be challenging as individuals sometimes face financial difficulties and often have trouble understanding their medical bills as true price transparency remains elusive in healthcare.
At Becker's 8th Annual CEO & CFO Roundtable in Chicago in November, Waystar hosted an executive discussion to explore different strategies that health systems are using to streamline the revenue cycle and receive payment more efficiently by patients and payers alike. Roxanna Herrell, Waystar's director of product marketing, led the conversation.
Preventing denials can have a meaningful impact on the cost to collect
Addressing claim denials is a top priority for health system finance leaders across the nation. A CFO from a nonprofit hospital in the Southwest said, "The most important thing is not having a lot of denials. We are proactive on the front end. We do a lot of training and education to ensure that coding is done correctly. We hire consultants to conduct audits and ensure that we are up to speed with coding and medical necessity. If we see denial issues with certain payers, we meet with them to discuss how to improve documentation."
With regard to prior authorizations, a healthcare consultant explained that many healthcare systems have a preauthorization team in every department. This disjointed approach makes it difficult for revenue cycle teams to streamline the preauthorization process. Forming a centralized team can address this problem.
If denials do occur, it is essential to challenge them. The CFO of the nonprofit hospital in the Southwest said his organizations has RNs in the department of revenue that go after all medical necessity denials. If the claims are still denied, the hospital hires consultants with specialized physicians who go head to head with physicians at the payer organizations. Once payers realize that a hospital isn't an easy target, they often walk away because it takes too many administrative resources to fight. Many payers test hospitals and markets to see which will agree to their first level of denial and which ones will push back.
Technology-based solutions can reduce inefficient manual processes
Manual processes in the revenue cycle can be costly and represent an inefficient use of human capital. The CFO of a hospital in the Midwest said, "It's important to leverage technology in the revenue cycle. Processes are ripe for efficiency."
By adding technology into workflows and applying artificial intelligence to EHRs, health systems can simplify the revenue cycle, reduce the cost to collect and increase patient satisfaction.
"We're at the point with technology where we can learn what payers are approving and declining," Ms. Herrell said. "Descriptive and predictive analytics enable software to get smarter over time and reduce the manual work needed for prior authorizations."
Robotic process automation (RPA) can also help reduce the manual processes associated with claim status check monitoring. RPA can take many forms ranging from artificial intelligence to data scraping.
Propensity to pay and coverage detection tools can also improve patient payments
Software-based solutions can also help health systems evaluate patients' propensity to pay. Waystar has partnered with FICO to create an algorithm that predicts how much a patient is likely to pay in a given amount of time for a medical bill.
According to Ms. Herrell, "Our suggestion is to move propensity to pay analysis to the front end of the revenue cycle. When you run propensity to pay at the front end, you can have meaningful conversations with patients about financial obligations. This ensures a better patient experience and a better financial outcome for the provider.”
If patients have a low propensity to pay and a high account balance, health systems may decide to implement payment plans. A best practice is to structure the plan so the bulk of the money is paid up front, since payment plans are rarely paid in full. Brett Hoium, Waystar's product marketing and integration strategy manager, observed, "Many insured patients even qualify for financial assistance.”
Unpaid patient bills are often a problem with emergency room cases. Coverage detection tools are essential for organizations with an emergency room or ambulatory setting. In an ideal world, health systems will get the cash value out of the claim and the rest can be written off. Ms. Herrell said, "Often, nonprofits can reclassify up to 30 percent of bad debt as charity care. If you don't have a presumptive charity screening process in place, look at that to reduce bad debt while still meeting charitable requirements for your tax rate."
Conclusion
When it comes to reducing the cost to collect, the odds are stacked against healthcare organizations that rely on manual processes. To address this issue, leading health systems are leveraging software and artificial intelligence-based solutions.
"You need to simplify and unify the revenue cycle so you can focus on your patients and your financial goals," Ms. Herrell said. "Waystar wants to innovate and help you improve stagnant KPIs while improving your overall cost structure, so you get paid what is owed to you for the care you provide to patients."